Alphabet to pass Apple to become world's most valuable company

It reported a rise in profit to 4.9 billion US dollars (£3.4bn), up from 4.7 billion (£3.2bn) in the same period last year, boosted by strong sales of advertising on mobile devices and YouTube

According to analysts, the spike in Alphabet's share price gives the company a potential estimated value of 558 billion US dollars, with Apple currently revalued at around 534 billion. The company will need to confirm the lead when the markets reopen on Tuesday. 

Alphabet, announcing its first results under a new reporting structure aimed at improving transparency, said consolidated revenue jumped 17.8 percent to $21.33 billion in the fourth quarter ended Dec. 31, from $18.10 billion a year earlier, on Monday.

Total operating losses on 'Other Bets' - which includes 'moonshots' such as self-driving cars, glucose-monitoring contact lenses and Internet balloons - increased to $3.57 billion in the 12 months ended Dec. 31, the first time the company has revealed the figures.

Google's shares rose 6.4 percent to $820 in after-hours trading on Monday, putting the company on track to overtake Apple as the most valuable company in the United States when regular trading resumes on Tuesday.

Google's advertising revenue increased nearly 17 percent to $19.08 billion, while the number of ads, or paid clicks, rose 31 percent, the company said.

Advertisers pay Google only if someone clicks on their ad.

'Our very strong revenue growth in Q4 reflects the vibrancy of our business, driven by mobile search as well as YouTube and programmatic advertising, all areas in which we've been investing for many years,' said Ruth Porat, CFO of Alphabet.

We're excited about the opportunities we have across Google and Other Bets to use technology to improve the lives of billions of people.'

Net income in the fourth quarter rose to $4.92 billion, or $7.06 per Class A and B share and Class C capital stock, from $4.68 billion, or $6.79 per share.Excluding one-time items, Google earned $8.67 per share.

Analysts on average had expected a profit of $8.10 per share and revenue of $20.77 billion, according to Thomson Reuters I/B/E/S.

Investors also have applauded the creation of Alphabet, which is structured to provide more information about the cost of the company's experimental ventures into self-driving cars, Internet access services, health science and city management.

All of those factors have helped lift Alphabet's stock — previously Google's — by 41 percent since the end of 2014.

It's a potentially big shift for Apple, which has held bragging rights as the world's most valuable company for most of the past four-and-a-half years. (ExxonMobil seized the high ground for a brief time in 2013.)

Alphabet would become the 12th company to rise to the most valuable spot, according to Standard & Poor's. 

That's a dramatic swing from where things stood just 13 months ago. 

Apple then boasted a market value of $643 billion, almost twice Google Inc.'s $361 billion.

Since then, investors have soured on Apple.

The company has struggled to come up with another trend-setting product amid slumping sales of its most important device — the nearly 9-year-old iPhone, which accounts for roughly two-thirds of Apple's overall sales.

Apple has already acknowledged the iPhone will begin this year with its first quarterly sales decline since it debuted in 2007. 

The slowdown helped push down Apple's stock price by 15 percent since the end of 2014.

In contrast, Google has maintained its leadership in the lucrative Internet search and ad market while building other popular products in video, mobile, web browsing, email and mapping. 

BGP Financial analyst Colin Gillis believes the potential changing of the guard reflects a wider recognition that Alphabet is fostering a 'culture of innovation' while Apple has lost some of its magic since the October 2011 death of co-founder and former CEO Steve Jobs. 

'I no longer see a sense of urgency at Apple,' Gillis said.

(http://www.dailymail.co.uk/sciencetech/article-3427208/Alphabet-posts-revenue-expectations-shares-rise.html)